Answer:
$60,000
Explanation:
Calculation to determine what The implicit costs of Harvey's firm in the first year were
First step is to calculate the Total revenue
Total revenue = 11000 × $75
Total revenue=$825,000
Second step is to calculate the Explicit cost
Explicit cost = 11000 × $55
Explicit cost= $605,000
Third step is to calculate the profit
Profit = $825,000-$605,000
Profit=$220,000
Now let calculate the Implicit cost
Using this formula
Implicit cost =Profit-(Amount earned per year +Forgone entrepreneurial income+Bond at 10% interest per annum)
Let plug in the formula
Implicit cost=$220,000-[$45,000+$5,000+($100,000+10%*$100,000)]
Implicit cost=$220,000-[$45,000+$5,000+($100,000+$10,000)]
Implicit cost=$220,000-($45,000+$5,000+$110,000)
Implicit cost=$220,000-$160,000
Implicit cost=$60,000
Therefore The implicit costs of Harvey's firm in the first year were $60,000
